Running Down a Dream: Breaking the Transmission Bottleneck

Marc Miller (0:12)

Welcome to the ScottMadden Energy Exchange, conversations with leaders shaping the future of the energy industry. I'm your host, Marc Miller, partner and energy practice leader at ScottMadden. In this podcast, we explore the most important issues facing utilities and energy companies, from infrastructure and regulation to operations and strategy. We focus not just on what's changing, but on what it takes to execute in a complex and evolving environment.

Today's episode is titled Running Down a Dream, Breaking the Transmission Bottleneck.

The electric power industry is entering a new phase of growth. Electricity demand is rising again, driven by data centers, electrification and new industrial load. But while attention often focuses on generation resources, one of the biggest challenges may be transmission development. Across the country, utilities and system operators are working to expand the grid. But projects can take years to permit, finance, and build. The result is a growing conversation about whether the transmission system can keep up with the demands being placed on it. To explore this challenge, I'm joined today by Dave Adams, a partner and transmission expert at ScottMadden, who works closely with our clients on this topic. Dave, we like to start with the big picture. Why has transmission become such a central topic in industry discussions?

Dave Adams (1:43)

Yeah, thanks, Marc. Transmission has really become the enabling infrastructure for the next generation of electric grid. If you think about it, for years, the industry has been focused primarily on generation.

Building cleaner resources, improving reliability, and managing costs.

What's different today is that several industry trends that once evolved independently are now converging. Load growth is accelerating, generation resources are changing, and reliability expectations have really never been higher. Transmission is what connects all those pieces. Transmission allows utilities to access lower cost energy, improve reliability, integrate renewable resources, and serve rapidly growing demand for things such as data centers, manufacturing, and electrification. Without significant investment in the transmission system, many of those broader energy objectives are simply not achievable.

Marc Miller (2:41)

Dave, when people talk about the grid needing to expand, a lot of the focus, as you said, tends to be on generation, but the reality is that without transmission, few of those new resources can reach the customers that need the power. How should leaders be thinking about the role the transmission system plays today?

Dave Adams (3:02)

You may have heard transmission referred to as the interstate highway system for electricity.

Generation is only as valuable if you can actually move that power where it's needed and consumed. Historically, transmission was built primarily to support reliability, today it serves multiple purposes simultaneously. It improves resilience during extreme weather, reduces congestion costs, enables competitive energy markets, it connects new renewable energy and conventional generation sources, that also creates flexibility as load patterns change over time. It really is no longer just a support function, it's become a strategic asset that enables nearly every major objective utilities have today.

Transmission has also moved, if you think about it being an engineering discussion to more of a boardroom discussion. Boards are increasingly making decisions about how to balance load growth, affordability, reliability, and the deployment of capital and those investments that go along with that. Utilities can expand their transmission system efficiently, will be much better positioned in the long term to attract new economic development, connect large customers on schedule, and meet growing demand. For many, it's becoming a real competitive differentiator. And those that are able to embrace these concepts are going to be positioned much better as they look to serve customers and deliver value to those that receive it.

Marc Miller (4:37)

That's a great point, Dave. One of the interesting dynamics right now is that electricity demand's starting to grow again after a very long period where growth was pretty flat.

Recent forecasts show both peak demand and overall energy consumption increasing through the end of the decade, maybe longer. How significant is this shift compared with what the industry experienced over the past 15 or 20 years?

Dave Adams (5:03)

Yeah, Marc, it's one of the biggest challenges we've seen in decades. For many years, utilities plan around modest growth, driven largely by population increases.

Many of our clients had to revise their five-year load forecasts multiple times over just the past two or three years as new data center, industrial opportunities, and similar large loads continue to emerge very quickly. That level of uncertainty is unprecedented for many transmission planning organizations, and it's really sent them off into a tailspin in some respects.

Utilities are now forecasting annual growth that they haven't experienced since the early 2000s. This fundamentally changes transmission planning, and because it can take as much as 10 or more years to put new assets in service, utilities must be forward thinking and build to where the demand will be, not just where it is today.